10/10/2013. Hawaii Regional Annual Conference Conflicts of Interest Never End. Conflicts of Interest: Disclosure, Monitoring and Auditing

Transcription

1 Hawaii Regional Annual Conference 2013 Conflicts of Interest: Disclosure, Monitoring and Auditing SHERYL VACCA, CHC-F, CCEP-I, CCEP-F, CHRC, CHPC SVP/CHIEF COMPLIANCE AND AUDIT OFFICER UNIVERSITY OF CALIFORNIA 1 Conflicts of Interest Definitions How General Bodies Define it Any relationship that is or appears to be not in the best interest of the organization. A conflict of interest would prejudice an individual's ability to perform his or her duties and responsibilities objectively. Institute of Internal Auditors (IIA) A real or seeming incompatibility between one s private interests and one s public or fiduciary duties. Black s Law Dictionary A conflict between the private interests and the official responsibilities of a person in a position of trust Merriam-Webster 2 Conflicts of Interest Never End Doctors with links to drug companies influence treatment guidelines Faculty on corporate payrolls while holding key administrative positions in academia. Influence their decisions, less likely to criticize company paying them? Science being influenced by drug company money? Conflict of Interest Problem: Doctors on Advisory Panel Owned Stock and Received Lecture Fees from Drug Companies 3 1

2 Why Conflicts of Interest Matter A conflict of interest increases risk of bias or poor judgment because of an obligation or commitment to two or more competing interests A perceived conflict can tarnish public image and erode community trust Government regulators expect companies to assess their exposure to the risks of conflicts of interest 4 Conflicts of Interest: Complex & Elusive A lack of unified and comprehensive law Challenge to define, identify, and therefore address Lack of clear rules Personal context in which conflicts arise Discretionary nature of transactions and activities Objectivity may be difficult As a result, conflicts are often overlooked and underappreciated Need to look at all sides of the equation Opportunity for broader training and awareness 5 Sunshine Act High level One of many COI areas for the Compliance Officer s focus Information flow on this topic has been abundant but clarity in process and reporting still evolving 6 2

3 Sunshine Act Origins & Goals Background Adopted as part of the Affordable Care Act of USC USC 1395hh Final Rule issued February 8, CFR Sunshine Act Origins & Goals Key Dates: Tracking by reporting entities began August 1, 2013 Reports to CMS due March 31, 2014 First publication by CMS by September 30, 2014 Note: Final Rule is definition heavy 23 significant definitions 8 Sunshine Act Origins & Goals Policy Goal: You should know when your doctor has a financial relationship with the companies that manufacture or supply the medicines or medical devices you may need. Disclosure of these relationships allow patients to have more informed discussions with their doctors. Peter Budetti, MD CMS Deputy Administrator for Program Integrity 9 3

4 General Purpose These regulations apply to applicable manufacturers and applicable group purchasing organizations and describe the requirements and procedures for applicable manufacturers to report payments or other transfers of value provided to covered recipients as well as for applicable manufacturers and applicable group purchasing organizations to report ownership or investment interests held by physicians or immediate family members of physicians in such entities. 42 CFR General Purpose (important terms underlined) These regulations apply to applicable manufacturers and applicable group purchasing organizations and describe the requirements and procedures for applicable manufacturers to report payments or other transfers of value provided to covered recipients as well as for applicable manufacturers and applicable group purchasing organizations to report ownership or investment interests held by physicians or immediate family members of physicians in such entities. 42 CFR Who is obligated to make reports? 1. Applicable Manufacturers Produces, prepares, compounds drug, device, biologic or supply that is reimbursable under Medicare or Medicaid; and Is not being used by itself for its own patients 2. Applicable Group Purchase Organizations Purchase, arranges, negotiates a covered drug, device, biologic or supply reimbursable under Medicare or Medicaid; and Not used by the GPO itself. Note: Check detailed definitions and exceptions 12 4

5 What is covered by reports? Or What is tracked? 1. Payments or other transfers of value; and 2. Ownership or investment interests in the reporting entity Note: Who is tracked for #1 is different from who is tracked for #2! 13 Who is covered by the reports? (depends on what is being reported) 1. For Payments and Transfers of Value: Covered Recipients Physicians Teaching Hospitals Note: Includes transfers made to Third Parties but intended for benefit of a covered recipient 2. For Ownership or Investment Interests: Physicians Immediate Family Members 14 Another way to look at it. Tracked and reported to CMS Payments and Transfers of Value by reporting entity to Physicians Teaching Hospitals Investment or Ownership Interests of Physicians Immediate family members of physicians in the reporting entity 15 5

6 Special Rules on Reporting Research Funds Research funds must be reported if provided to: Physician; Teaching hospital; or Third Party for the benefit of the physician or teaching hospital To be reported includes (but not limited to) Study name Amount of funding Delay in publication allowed if requested by sponsor under certain circumstances Delay can be no longer than 4 years 16 Penalties Strict liablity: $1000-$10,000 per failure to report; aggregate cap of $150,000 Level of Knowledge (parallels False Claims Act): $10,000-$100,000; aggregate cap of $1M Note: penalties are on the reporting entity 17 Compliance and Operational Considerations Biggest Issue: Everyone will know! Physician certification of accuracy Penalties in Rule do not apply to physicians or teaching hospitals but pay attention to what the certification says and whether it is subject to perjury penalties (likely) 18 6

7 Compliance and Operational Considerations 45 Day response time to review Research funding and projects will be public Specific to study Will budgets be scrutinized? And much more.. 19 Conflict of Interest Areas (Beyond PSA) Competing responsibilities, obligations, and interests = COI COI is not inherently wrong But, at a minimum, COI must be carefully managed 20 Common Conflicts Of Interest Use of Company Information for Private Gain General Financial Interests (hidden ownership, bid-rigging, procurement fraud) Moonlighting (employment and future job offers) Service on a Board of Directors Family and Romantic Relationships Nepotism 21 7

8 Common Conflicts Of Interest Spouses, Domestic Partners, Immediate Family Members or Relatives as Suppliers, Vendors, Customers Implied Pressure on Employees to Use a Manager s Relative Vendor Relationships - Kickbacks and Rebates Gifts from Vendors, Customers or Others Improper Use of Company Assets 22 Who Can Have a Conflict of Interest? Conflicts may involve individuals Individual level situations When an individual s outside activities or personal interests influence or appear to influence the ability to make objective decisions One s official position and/or influence is used to gain an improper advantage (economic or noneconomic), for the individual, or for family members, associates, vendors, and customers External commitments burden or otherwise interfere with one s primary obligations Analysis Who is in a position to profit or cause harm when acting in a conflict situation? (Incentive) Can the individual exercise discretion? (Opportunity) 23 Disclosure: Certifications and Questionnaires Certifications Used by organizations for select (mostly high-level) or all employees Provide employees opportunity to report Typically require employees to certify that they have read and are familiar with the conflicts of interest policy (and code of conduct) Certify they are not aware of any violations of the policy Questionnaires Request employees to supply information and respond to more detailed questions, not just certify Large organizations utilize Web and electronic systems to manage the process and data 24 8

9 Resolving a Conflict of Interest Basic examples of potential resolution options Remove the interest before participating in a decision or continuing in your role; e.g., selling stock, promptly returning a gift, terminating outside activity Recuse yourself from the decision and avoid participating in or otherwise influencing the decision Discipline dimensions for conflicts of interest violations Fairness: perception by workforce, regulators, and public Rigor: effectively addressing the conflict issue Deterrence: discourage and prevent future misconduct 25 Conflicts of Interest Program Activitiesexamples of process controls Annual, Monthly and Ongoing Identify participants in the process Solicit disclosures Track completion of disclosures Develop appropriate resolution for disclosures Assure there are review and approval mechanisms in place Assure these mechanisms are communicated Track these mechanisms and that process being followed Monitor, audit these mechanisms for controls in place 26 Who Should Participate in COI Disclosure Program? Everyone in the organization has a responsibility to avoid and disclose/report conflicts of interest, but only certain individuals need to complete a disclosure statement on an annual basis 27 9

10 Process Should Identify Participants & Develop Criteria for Disclosures Individuals who should complete disclosure on an annual basis: in leadership positions influence purchasing decisions for products and services own private practices or businesses that seek to do business with company have commitments or relationships with competing organizations have outside employment relationships with businesses that seek to do business with company or are competitors of company work in targeted areas/departments previously had a conflict identified 28 Auditing for Compliance to COI Giver Review expenditures, T&E reports in sensitive areas Audit employees with highest expense reporting Random spot audits of expense reports Receiver Trace and validate the receipt of funds (grants, gifts, etc.) for appropriate use Review pre-approvals and waivers for consistent application Some organizations are now asking suppliers to confirm that payments have not been made, or gifts given to - variation of the holiday letter to suppliers) 29 Auditing ideas - Identifying Undisclosed Conflicts Random and targeted audits of expense reports Interviewing and surveying the workforce Perceptions of work environment and willingness to report misconduct Awareness and understanding of conflict of interest policies and training received Including vendors/suppliers in a certification and disclosure process Proactive data analysis as part of fraud risk management activities Joining and analyzing disparate data sets, external data 30 10

11 Monitoring Techniques Building notification triggers into expense and gift reporting when thresholds are reached Develop trend and exception reports of entertainment data Require close review and accountability of expense reports by managers with approval authority Review helpline/hotline reports for calls alleging conflicts of interest, and questions concerning conflict policies Periodically question vendors and suppliers (they should be required to notify you of potential conflicts) Periodically monitor sunshine act reporting 31 Prevention Training, training, and more training Ongoing company-wide compliance education and awareness New physician and/or employee orientation, management training, and executive seminars Interactive, scenario-based training covering COI process/disclosures Annual disclosure statements Appropriate disciplinary action for violators Knowledge of proactive detection process in itself is prevention 32 Effective Management of Conflicts Understand that appearances matter Recognize that conflicts of interest are inevitable and do not imply guilt most are manageable Education, guidance and awareness are essential Utilize information and insights gleaned from your C&E processes (risk assessment, training, auditing, monitoring, etc.) and adjust your program accordingly Update your policies and practices to reflect the changing risk profile Ensure that your conflict of interest processes themselves are conflict free 33 11

12 Effective Management of Conflicts Transparency matters PSA-expectations and obligations are evolving Other areas of COI should have transparent processes Document, document, document Process should be defined,documented Policies should be clear regarding expectations about disclosures and applicability Periodically review process to determine it is working 34 Questions? 35 12